Futures are recovering after today’s rout in the markets, a near 3% whackage.

Tomorrow is the big NFP, with a possible +5k handle.

Question: Is bad good? Does a good number mean bad things — the earlier withdrawal of the Fed’s free  money regime?

How much lower can we limbo?

~~~

What say ye?

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

73 Responses to “Open Thread: NFP, Market Collapse”

  1. Mannwich says:

    I’m wary of a rally on a bad jobs number tomorrow (meaning more bailouts and QE = Wall Street free candy), but this latest down leg feels different. I think the market’s in trouble regardless of what happens tomorrow.

  2. Winston Munn says:

    “No one knows where the hobo goes when it snows” – Amarillo Slim Preston

  3. bpg131313 says:

    If the market rises substantially tomorrow, it’ll be the work of the Plunge Protection Team working overtime in after hours futures. I am convinced that these games can not go on forever, and there’s nothing positive in the news to give them a justifiable bump.

    Should a bump happen tomorrow, do not expect it to hold. The bears are out in droves and they march toward Wall Street. Luckily, I’ve already exited. Asia flatlined at nearly −300 today as of this posting. There’s nothing left in the irrational market. Something tells me we’re in for an interesting Presidents Day weekend.

  4. DiggidyDan says:

    I’ve been waiting for this event and not really participating much lately. see: http://www.ritholtz.com/blog/2010/01/consolidation-or-rallys-end/#comment-247450

    Question is, will we see a short strangling bump up before the real carnage?

    (and will I have a job and an income to take advantage of the situation?)

  5. call me ahab says:

    c’mon BR- are you kidding me? we are back to bad is bad-

    eyes are starting to open that it is really that bad-

    and there are no solutions that can avoid deflation-

    credit destruction wins- the Fed would have to create 10x more in QE to even make a dent in that-

    and you know that can’t happen

  6. Mannwich says:

    @ahab: Hilarious. After a 10 month+ hiatus in collective close-our-eyes-and-click-our-heels-three-times-la-la-land, “back to bad is bad”. So true though. Should be BR’s quote of the day tomorrow.

    What better month than dreary February than for the masses to start waking up to a little cup ‘o reality?

  7. torrie-amos says:

    down volume in fxi, ewz, jjc and strong volume on the dollar are imho X-tremely important tells, these are substantial down moves, imho, tommorrow is a non-entity, state and local muni’s are now the new lay-off kings, the odds imho say it’s a non-event, every one before has had all eyes on it, we have now entered the territory where buys on same equities going back to august are now printing red

  8. call me ahab says:

    . . . and BR-

    if we get that 5,000 print-

    LMAO- guess our problems are solved-

    I wish we could all be census workers

  9. wunsacon says:

    Agree w y’all…this does feel different. Many things are “coming to a head”.

    The magicians threw their smoke pellets to the ground. But, the smoke dissipated and we can still see them.

  10. call me ahab says:

    manny-

    skiing or boarding tomorrow?

    also- take you smart phone so you can keep abreast of the market on the slopes-

    ok- that’s a joke-

    tear it up on the mountain my man

  11. Mannwich says:

    @ahab: Skiing. I’d love to learn how to snowboard but I’m not a very good skier and am trying to master that one first. I just don’t get out enough but am planning on a little Steamboat, CO weekend in March, so I need to practice up here in the minor leagues for the big-time out there.

    It’s a puny little hill here but for me it’s all good and great during the week. Not crowded at all, so no lift lines and no worries about getting clobbered by someone on the hill.

  12. Mannwich says:

    @wunsy: It’s more like they lit a bunch matches but we can still smell the stench. It’s just burnt stench now.

  13. jeff in indy says:

    guess we’ll see how the EU markets react to the UK’s pull-back of QE. a tale of fortunes to come?

    http://www.marketwatch.com/story/bank-of-england-pauses-bond-purchases-2010-02-04?siteid=bnbh

  14. torrie-amos says:

    ooopppppps, asia gaps down big, all of em

  15. Joseph Martinez says:

    Could this be the June dip everybody is excepting?

  16. beaufou says:

    Greece, Spain and Portugal down the tube.
    Soon, the UK will follow and eventually the rest of us, is there anybody out there?

  17. Transor Z says:

    We have become a Nazi monster in the eyes of the whole world, a nation of bullies and bastards who would rather kill than live peacefully. We are not just Whores for power and oil, but killer whores with hate and fear in our hearts. We are human scum, and that is how history will judge us. No redeeming social value. Just whores. Get out of our way, or we’ll kill you. Who does vote for these dishonest shitheads? Who among us can be happy and proud of having all this innocent blood on our hands? Who are these swine? These flag-sucking half-wits who get fleeced and fooled by stupid little rich kids like George Bush? They are the same ones who wanted to have Muhammad Ali locked up for refusing to kill gooks. They speak for all that is cruel and stupid and vicious in the American character. They are the racists and hate mongers among us; they are the Ku Klux Klan. I piss down the throats of these Nazis. And I am too old to worry about whether they like it or not. Fuck them.

    -Hunter S. Thompson

  18. call me ahab says:

    wunsacon @ 10:50-

    like a medicine show my man- I am beyond cynical at this point- the fools on Wall Street have blown all credibility for a generation and the people who hustle equities or commodities- are in fact just that- hustlers- and they have zero respect from me

    manny-

    some of the smaller mountains are fun actually- especially if away from the crowds- it’s funny- I don’t know how to ski- only snowboard- we’re polar opposites-

    Steamboat- wow- that will be a great time!

  19. Transor Z says:

    Barry I don’t think a trivial positive NFP print stops this baby. I really think you might get your 1038 tomorrow.

  20. call me ahab says:

    TZ-

    ol’ HST sure knew how to sugar coat things

  21. Steve Barry says:

    If the market is finally allowed to get back to sanity (ie. pre-1995 valuations), you could see S&P at 450 which would be a strong bottom and good buy. Then you can expect good returns going forward. That number would be lowered of course if we enter Depression 2.0.

  22. Transor Z says:

    Ahab, it jumped out at me b/c there are a lot of themes we’ve been throwing around this week, especially the Whore theme.

    Manny, have fun skiing tomorrow. Glad you’re not a knuckle-dragger like Ahab. :-)

  23. Transor Z says:

    This is kind of a big deal:
    http://www.marketwatch.com/story/chinas-2009-current-account-surplus-falls-35-2010-02-04-231900

    China’s current-account surplus shrank by 35% last year, the first decline since 2001, according to preliminary figures released Friday by the State Administration of Foreign Exchange.

  24. call me ahab says:

    TZ-

    yeah- not surprising that HST took matters into his own hands-

    hopefully I won’t get quite so jaded- although this almost sent me over the edge-

    “Glad you’re not a knuckle-dragger like Ahab.”

  25. Transor Z says:

    Ahab: You clowns need to stop scraping off the corduroy and sitting on your asses in the middle of trails. That’s all I’m saying. I’m not saying I’m ready to piss down your throats like HST, but I really wish you’d GYOFM. I’m outta here. Going to watch the last episode of “Generation Kill.”

    Answered my own question from the earlier thread re: China’s trade surplus. How do you say “No es bueno” in Chinese?

    Later.

  26. jpm says:

    Futures look like they are up 0.2%. I’m not sure that qualifies as recovering after 3% down…

    http://quotes.ino.com/chart/?s=CME_ES.H10.E&v=s

  27. Trainwreck says:

    What happens in Euroland does not stay in Euroland, or for that matter, the rest of the globe. Any debt that fails that is based upon the USD is good for the USD. Any debt that is based upon the Euro that fails is good for the USD.

    In essence we are seeing what it truly means to have a global economy built around the USD. Illusionary dollars are evaporating. Gold is a false god (for now), and too many nations depend too much upon the creation of wealth via the reliance on debt.

    I am not an Austrian, and much that they espouse (especially when it comes to gold) I find foolish, but they are spot on when it comes to their criticisms regarding nations relying upon debt. At some point in time every “ism” is proven right.

    China? A mystery to me due to the utter lack of transparency.

  28. Cynic_FA says:

    Thanks for the forum BR…..Good is bad and Bad is worse
    The trendline break is a good call. The best site I know is Decisionpoint.com; see the chartspotlights which highlighted the risk of the ascending triangle which was broken in January.

    Read a research paper: Is China’s Export-Oriented Growth Sustainable?

    Author/Editor: Guo, Kai | N’Diaye, Papa

    at IMF research because I am trying to find out how much of China GDP growth is construction and capital investment ofr growth which totally depends on a fast recovery in the U.S. Bottom line for the paper is the China Export growth targets can only be achieved with 20% to 40% price cuts in Steel, Shipbuilding, and Machinery. China growth at 10% is the gasoline on the global fire of excess capacity and deflation. Read your 1930′s history and the next step is competitive currency devaluations and trade sanctions.

    I don’t know why you are talking about 1080 or 1038 on the SP 500. Come on BR, if the bank problem gets worse shouldn’t we be talking about 879 from the July low and OMG I pray that I never see 666 again.

  29. Trainwreck says:

    P.S. funny how the talking heads were claiming that a failure to reappoint Bernanke would cause the markets to tank.

  30. call me ahab says:

    “You clowns need to stop scraping off the corduroy and sitting on your asses in the middle of trails. ”

    well TZ- snowboarding is a more demanding sport that requires frequent breaks to let the adrenalin equalize- and gives a boarder time to reflect on his badass moves- and revel in such with the other brosephs-

    thus- the breaks(-:

  31. kblasi says:

    950 within 2 weeks.

    I guarantee it.

    It’s different this time.

    (…pointing to center field bleachers)

  32. kblasi says:

    1350 by year end.

    I guarantee it.

    This is a text book recovery.

  33. Paul Jones says:

    This is all dollar driven.

    This is all fraud.

  34. Boots or Hearts says:

    Some carry trade unwinding. Since the 3x funds are all the rage these days, a ho hum vehicle such as the UUP does not get too many folks excited……

  35. DL says:

    Whatever it takes to get some fear in the market; then we’ll get a good rally.

  36. Winston Munn says:

    @ Paul Jones,

    “This is all dollar driven.

    This is all fraud”

    Does that make the 3% down day a Fraud-ian slip?

  37. Cynic_FA says:

    Trainwreck might like the following quote in honor of Black History month:

    “As an individual who undertakes to live by borrowing, soon finds his original means devoured by interest, and next no one left to borrow from – so must it be with a new government”

    Abraham Lincoln quotes (American 16th US President (1861-65), who brought about the emancipation of the slaves. 1809-1865)

    The lenders will bring about their own demise as they refuse to lend more to the debtors and suffer as the loans default. The rush to stop all lending is caused, as the cynic says, because each individual lender is motivated only by selfishness. Unaware that for the public good, each individual lender, along with all lenders must increase lending and accept risk or suffer economic collapse.

  38. SiValleyEE says:

    What’s happening, in my very humbled opinion:

    China is trying to cut down it’s growth rate by having it’s bank examiners pull back all funds lent, via it’s stimulus programs, into speculative housing and buying stocks. Which was a lot of it’s stimulus funds. So their home sales were down 50% last month., that kills copper and steel stocks, and everything related to the Chinese stock market.
    (They should raise their currency exchange rates to slow down their economy in order to play fair to the rest of the world’s economies, and let them have jobs, but they only care about themselves.)

    Add in Greece, Portugal, … bombing out on paying their debts, rates for them are going way up. New taxes and austerity programs will severely rescind their recoveries from this economic “banana”. The CDS spreads on their debt are going way up.

    No regulation has been imposed on the hedge funds and only a bit on the investment banks/traders. They can play the same games of scaring the CDS spreads up, while shorting the debt. And, the ones who issued the CDSs still don’t have to have enough capital to back them up in case of defaults.

    The hedge funds/investment banks are highly leveraged on the commodities and momentum stocks, with the US dollar as the currency borrowed to buy these items. They need to bail out of these trades, and bail out of the US dollar. Thus the commodities and stocks go down, while the dollar goes up. Giving positive reinforcement to these trends, reinforcing the downward momentum.

    What stopped the downward momentum before? Government intervention. Either via temporarily limiting shorting games or throwing money at the problem like bailing out rich bankers. What stopped it good was the world throwing more money than they had at the problem, via stimulus programs and insanely low interest rates.

    This won’t be as bad as 2008/2009, since the world has insanely low interest rates pumping massive amount of money into the system. That money has to go somewhere, like into stocks at some point. China’s government will do it’s usual and start spending again after they all get back from their New Year’s vacation, with the budget and plan for the next year. That’s still a month from now, though. And, it’s much tougher to scare a country into bankruptcy than a company into it. And, the leverage employed is way lower, 12 to 1 max, with a lot of that leverage employed buying longer treasuries while borrowing on short dated treasuries. Goldman, and some of the smarter ones, will make a stand sometime soon on stocks/companies on a VALUE basis, not on a trading basis. And, again, beat the crap out of the hedge funds/investment banks playing the momentum to the downside.

    In the meantime, save capital for taking a shot down field a touch later. Many companies are still trading at incredibly low forward P/E’s, such as Intel (11), HPQ (11), AAPL (13, after subtracting $40 in cash). Copper, gold, and steel stocks may get crushed and be on the buy list also. Oil is getting crushed in the downward selling spiral, OIH names may be able to be picked up cheap. Making the buy list for when the next bottom gets hit, whether it be a week from now, or a few months from now. I wish i knew.

  39. Pat G. says:

    “the earlier withdrawal of the Fed’s free money regime?”

    Now that’s funny…

  40. forester_dude says:

    CNBC Headlines:

    # Expect Further 5% Correction, At Least: Strategist
    # Stock Dip is Great Buy Opportunity: Strategists

    You gotta love it.

  41. call me ahab says:

    “This won’t be as bad as 2008/2009, since the world has insanely low interest rates pumping massive amount of money into the system. ”

    credit deflation is beyond the Fed’s ability to counter except superficially-

    but think what you want

  42. I show the S*P 200 ema at 1045 – that would be a logical support area to watch

  43. cthayler says:

    The birth/death revisions tomorrow are key. Only happens once per year. I think that will reveal the double dip or actual recovery.

    Flight to safety and financials down in the past week. Sound familiar?

  44. Trainwreck says:

    SiValleyEE Says:
    “China is trying to cut down it’s growth rate by having it’s bank examiners pull back all funds lent, via it’s stimulus programs, into speculative housing and buying stocks. Which was a lot of it’s stimulus funds. So their home sales were down 50% last month., that kills copper and steel stocks, and everything related to the Chinese stock market.
    (They should raise their currency exchange rates to slow down their economy in order to play fair to the rest of the world’s economies, and let them have jobs, but they only care about themselves.)”

    How the hell do you personally know what China is doing? Any sources you are hiding? I don’t know anyone that can honestly say they know the shape of China’s economy. That by it self makes me think, not good. What future does China envision for its dollar holdings? US consumers suddenly discover dollars under their mattresses? Or perhaps their credit card debts have strangely disappeared? Or the idiotic heloc they took out, they never actually took out?

    Back to the magic of the housing market with ever increasing house prices, but oh wait, wages are not playing their part in this kabuki song and dance.

    Global wage arbitrage, nuff said.

    All I can say is buy beans, bullets and butter.

  45. Trainwreck says:

    I am often reminded of this quote by Keynes:
    “Banks and bankers are by nature blind. They have not seen what was coming…. A banker, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.”

    So if the US is to be ruined, ruin the rest of the world along side of us.

    Translation: Just make sure the rest of the world is ruined worse then we are.

  46. Transor Z says:

    Holy shit — are you guys looking at the Asian markets?????

  47. drollere says:

    i recognize this as the same crowd that predicted the market was imminently going to tank last summer. i jumped in, and was made whole.

    i’ve given up the pursuit of scrutiny and analysis. technical analysis? — an elaborate fraud, hocus pocus for geeks. i’ve just accepted that the market is impossible to predict. buy indexes, hold long, weight toward bonds, keep cash reserves. i’ve money enough; i prefer not to get poorer, or make brokers richer.

    there is a kind of macro envelope around the market and economies, a mix of politics, consumer and business mood, that is vaguely indicative of trends. i sense that investors conclude that washington can’t fix anything, including wall st.; they can only posture about it. all our national problems will just get worse because of administrative paralysis and debt pressure. that might be weighing on the market more than the statistics. still … bad here is not so bad when you compare it to bad anywhere else.

    i’m going on a very long vacation in a few days … last time i did that the market tanked 1000 points by the time i got back. just saying — for those who want to predict the market.

  48. Transor Z says:

    S&P 950 tomorrow?

  49. F. Horne says:

    Every day in the paper, or on Bloomberg, there has to be a narrative, a story line. So it’s Greece, Toyota, the latest jobs data, China tightening, oil is down, etc etc.

    But SiValleyEE has it nailed. This is the carry trade unwind. All those dollar shorts have to get covered before all the profit has melted away. Then there will be a new trading game. Meantime, buy when the fear is max.

  50. SiValleyEE says:

    Hi Trainwreck,

    Re your comment on “How the .. do you personally know what China is doing?”

    I don’t, i just read different sources, try to analyze the issues, and try to figure out. I really like BR’s writing,
    he approaches stuff from an analytical viewpoint. A good chunk of the commenters on this board also try to approach issues from an analytical viewpoint.

    Source of info on China was a quote from Sham Gad on RealMoney.com earlier this week:

    “New home sales dropped 51% in Shanghai in January.” … “To be sure, the supply of new construction was down by 47% as well. To more pressing news for investors….the CBRC, China’s banking regulator has ordered lenders to start conducting checks on whether or not any of the loans they made were illegally being funneled off into the property or stock markets…this sounds laughable when you consider the rise in asset prices in China in 2009…anyhow, whatever credit is determined to have been used for these sources “must be withdrawn within a certain period of time.” “

  51. Transor Z says:

    SiValleyEE,

    …the world has insanely low interest rates pumping massive amount of money into the system.

    A lot also depends on when they pull the rip cord on ZIRP . That’s going to be a shock to the system.

  52. drey says:

    “A lot also depends on when they pull the rip cord on ZIRP . That’s going to be a shock to the system.”

    Yeah, regardless of the timing Mr. Market will take it hard. Got a feeling bonds/treasuries are poised for a massive hit but maybe not for a few months with too many jittery investors seeking shelter from the commodity/equity wreck just now gaining momentum…

    Don’t know if I should stick it out with TBT or dump it and buy back in later.

  53. Eye Wall says:

    Pretty tame in the S&P’s tonight, getting the standard tailwind from a big down day.

    Have hated China (market) for a long time now. Reminds me of USSR and other ‘planned’ / too-much-Gov economies, they never seem to stand the test of time. Hmm, now that I’ve just written that it strikes me I could, increasingly, insert the three letters – U.S.A. – in place of China.

    I posted a long note in the open thread from the other night so won’t rehash that here, but I’ve got to tell you, I keep looking back at the 666 low print in the S&P and contemplate how…poetic / tragic it would be to get all the way back down there and break it. Talk about the path of maximal dissapointment.

    Anymore I just trade around the market, trying to predict the future if futile. Having a bias though – and protecting capital above all else – seems to be working for me. Was short (a little) coming into today and peeled it all off by the end of the day. Was in a levered ETF (SDS) so the % return was too good not to bank. Tomorrow is a new day, be careful out there.

    -EW

  54. Transor Z says:

    I keep looking back at the 666 low print in the S&P and contemplate how…poetic / tragic it would be to get all the way back down there and break it.

    Don’t worry, EW, the devil always gets his due. ;-)

  55. Eye Wall says:

    Transor Z,

    I wasn’t going to go there, but was thinking it! :>

  56. FrancoisT says:

    PIIGS + Unemployment funds at zero + NSF that sux + Housing that still sux + CDS = financial napalm

    One of these mornings, it’s gonna catch on fire. And the Bear will tell us with unrestrained glee:”It’s smells…victory!!

  57. SiValleyEE says:

    Thanks, F. Horne, i like what u said “Buy when the fear is max.” Or, just a touch after for safety. As well as liking what Eye Wall said, “Anymore I just trade around the market, trying to predict the future if futile. Having a bias though – and protecting capital above all else …”.

    Yea, i agree, in the long run, pulling in the massive amount of money via ZIRP and stimulus (fiscal policy) will be bad, as well as the effects from all this money sloshing around. Like in GhostBusters when Harold Ramis warns that crossing the beams would be “bad”. “Bad” as in global thermonuclear meltdown. But this is an election year. An, we still have “for an extended period” in the Fed statement. How much would u like to bet that short term interest rates might be just nudged up prior to November, with the real unwind sometime next year?

    That’s in the long run. In the short run, i’m just trying to find a point to take a shot downfield, set stop losses underneath once in to protect capital, and go from there. Easier said than done. Much easier said than done. Nite.

  58. GregP says:

    FWIW I see support @ 1030, not 1038. Major resistance now at 111.

  59. cognos says:

    You guys have some wierd sensationalism going on…

    TZ – “Holy shit … are you guying looking at the Asian markets????” @1am.

    Nikkei futures were down 300 at 515 pm eastern, when I walked away. They finished down 298. Looks like some mild bad news in Europe continues this morning. Down another 50 bps worldwide. Nothing to get too excited about.

    Generally, the down move setups the move back up. Just as the move up… to Jan 15, setup the down. Dont let your mind play tricks on you with silly notions of “broken support”.

  60. mathman says:

    Do you all see this playing out across the pond?

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7141221/Banks-told-to-comply-on-bonuses-or-lose-UK-banking-licences-in-shock-FSA-ultimatum.html

    too bad our “regulators” don’t tell Wall Street to go pound sand in this manner . . .

  61. wunsacon says:

    GET YOUR DOW 10,000 HATS OUT AGAIN!

  62. mathman says:

    lastly, bankers up to their usual tricks again:

    http://riverdaughter.wordpress.com/2010/02/04/stupid-banker-tricks/

    Enjoy the snowstorm, as states here in the NE are already over-budget and tax revenues continue to dry up.
    (Why didn’t PA tax the gas exploration in Marcellus shale, like everyone else does, to get some much needed revenue?)

  63. Steve Barry says:

    Watching CNBC, it seems talking head money managers totally buy into this massive “recovery” story…that is why Nasdaq bulls are at 75%. If they are stubborn and won’t get defensive enough, they will get slaughtered. They don’t see the pitfalls out there. That is the indicator to watch.

  64. torrie-amos says:

    Steve, lol, i was thinking the same thing, man, if it’s on a spread sheet it is god apparently.

    Jeeze, we’ve been on this board talking about where will growth come from to produce the jobs, no one has yet come up with an answer, and now it has come up for discusiion, lol,

    one more time folks, STATES AND MUNICIPALITIES ARE NOW IN LAY-OFF MODE, all you have to do is talk to your local muni/state workers, they sound and talk like exactly like we all did 20 years ago when we went thru a clean out in upper management at alot of companies

  65. SINGER says:

    Beware of short covering and position squaring based on the weekend G7 meeting and possible intervention stemming therefrom… Overall I dont see the recovery everyone is talking about in the Government and on TV…

  66. Chris says:

    Time to close the hatches again. Counterpartyrisk is geting too high.

  67. wunsacon says:

    >> (Why didn’t PA tax the gas exploration in Marcellus shale, like everyone else does, to get some much needed revenue?)

    If they’re going to tax gas exploration, the money should pay for maintaining the water supply. Not for unrelated spending.

    Budgets need to be cut. Public workers and pensioneers must either willingly accept big pay cuts “or else”. Or else they implicitly (a) roll the dice in bankruptcy court and (b) walk the streets and live without city services.

  68. johnborchers says:

    Barry didn’t you see the White House warning about payrolls yesterday? They suggested there could be significant revisions. It means #’s are terrible. They’ve reached the point where they can no longer fudge. The White House never prepares the stock market when the news is good.

    Recommend buying a bit of gold this morning before payrolls are out.

  69. DeDude says:

    “Public workers and pensioneers must either willingly accept big pay cuts “or else””

    Why the heck should they be paying for the taxcut parties of the rich? The top 1% have harvested all economic progress for decades now. I say tax the sh!t out of the rich and then confiscate whatever they have left. If we are still in the hole after that, then we can talk about hardworking regular people giving up something.

  70. holulu says:

    Stock trader going nuts. He used F word 48 times.

    http://www.youtube.com/watch?v=vIMwMsY0ndo&feature=player_embedded